European companies are expected to rush to comply with new whistleblower protection rules only when they take effect in December, meaning workers are not adequately protected for any disclosures they make in the meantime.
Legal experts believe many businesses will wait until their governments transpose the EU Whistleblowing Directive into national law before they make any serious effort to improve—or even facilitate—any speak-up arrangements.
Speaking as part of a panel at NAVEX Global’s 10th Annual Risk & Compliance Conference, Alexander Möller, partner at German law firm SKW Schwarz, said he expects a “wait-and-see” approach similar to the General Data Protection Regulation, where many companies only addressed compliance requirements once the legislation was in force.
U.K. whistleblowing advancements
The United Kingdom is attempting to improve its own whistleblower protection laws, as current legislation—the Public Interest Disclosure Act 1998—is widely seen as ineffective.
In January 2020, a whistleblower bill was sent to Parliament. It has had its second of three readings.
If successful, the bill will set up an independent body with powers to:
- Give direction to and monitor activities of regulatory bodies in their duties to encourage and protect whistleblowers;
- Act as a point of contact for whistleblowers;
- Form and maintain a panel of legal firms and advisory bodies to support whistleblowers;
- Maintain a fund to support whistleblowers;
- Provide financial redress to whistleblowers whose disclosure is deemed to have harmed their employment, reputation, or career; and
- Publish an annual report to Parliament regarding its activities.
In Germany—where there is no general whistleblower legislation—Möller said many companies have been slow to prepare. He added even foreign companies operating in Germany (and based in countries where whistleblowing protection is mandatory) have not put speak-up mechanisms in place because German employees, represented by work councils, are reluctant to set anything up until they formally must.
Since many EU countries are not expected to pass legislation on time, there is a “real danger,” said Möller, employees and others will not be afforded the protections they should be guaranteed under EU law.
The EU Whistleblowing Directive—due to come into force Dec. 17—aims to increase the scope and level of minimum protection afforded to individuals who speak up about possible wrongdoing, as well as those who may have facilitated the whistleblowing (including colleagues and relatives).
The directive aims to prevent retaliation against whistleblowers and requires companies to implement effective internal mechanisms to enable employees to report and escalate concerns internally.
Currently, only 10 EU countries—including France, the Netherlands, and Italy—have full whistleblower protection powers in place. The remaining 17 only offer partial protection and relate to either certain industry sectors, categories of employee, or specific corporate wrongdoing (such as financial misconduct).
“Legislation is all well and good, but it is the culture around whistleblowing that needs to change,” said Carlo Majer, partner at law firm Littler Italia. He added that while the rules might be in place to enable whistleblower protection “on paper,” in reality “employees will not denounce wrongdoing involving other employees, particularly in countries where informing on others is looked down upon.”
Legal experts are hopeful the directive might fill in some of the legislative gaps in EU countries where whistleblowing laws already exist.
However, Danny Vesters, partner at Dutch law firm Boontje Advocaten, complained the focus of the directive is wrong and conflicts with Dutch law.
In his opinion, the directive is more about the process by which employees should report to gain protection (internally rather than externally and allowing time for the company to respond/act before a whistleblower talks to a regulator or the media), rather than employees simply being given protection for making a disclosure.
“It will still be too easy for companies to dismiss employees and get away with it,” he added.
Vesters said while the directive does not provide financial rewards, whistleblowers should be given “financial support” instead to cover loss of earnings should they be demoted or fired. “People are simply being asked to give up too much,” he said.
Guillaume Desmoulin, partner in the Paris office of law firm Fromont Briens, also raised concerns about what the evidential threshold might be to gain protection, pointing out documents obviously carry more weight than conversations or verbal instructions in proving wrongdoing or corporate crime.